K to Invest 18.5 Trillion Won to Build Hydrogen Production-Distribution-Consumption Ecosystem by 2025
World's Largest Liquefied Hydrogen Plant to be Completed in 2023
Supply of 280,000 Tons of Eco-Friendly Hydrogen by 2025
[Asia Economy Reporter Hwang Yoon-joo] SK will invest approximately 18 trillion KRW over the next five years to actively establish a domestic hydrogen ecosystem. SK aims to become the world's number one hydrogen company in the value chain from hydrogen production, distribution, to consumption through domestic hydrogen business infrastructure investments and partnerships with global companies.
On the 2nd, SK announced its plan to build a domestic hydrogen ecosystem at the 3rd Hydrogen Economy Committee chaired by the Prime Minister, held at SK Incheon Petrochem, and officially began business execution.
The event was attended by government and local government officials including Prime Minister and Hydrogen Economy Committee Chairman Chung Sye-kyun, Minister of Trade, Industry and Energy Sung Yun-mo, Minister of Environment Han Jeong-ae, Mayor of Incheon Park Nam-chun, and Seo-gu District Mayor of Incheon Lee Jae-hyun. From SK Group, Chairman Chey Tae-won, President Jang Dong-hyun of SK Inc., President Chu Hyung-wook of SK E&S and Head of SK Hydrogen Business Promotion Team, and President Choi Yoon-seok of SK Incheon Petrochem attended. Hyundai Motor Group was represented by Chairman Chung Eui-sun, Hyundai Motor President Gong Young-woon, Hyundai Motor President Jang Jae-hoon, Hyundai Mobis President Cho Sung-hwan, and Hyundai Motor Vice President Kim Se-hoon. Attendees listened to SK's hydrogen ecosystem construction strategy and toured the site within SK Incheon Petrochem where the liquefied hydrogen production base will be established.
SK's domestic hydrogen ecosystem creation strategy will proceed in two main phases. In the first phase, by 2023, SK plans to supply 30,000 tons of liquefied hydrogen, the world's largest scale, based on by-product hydrogen in connection with Incheon City's 'Bio and By-product Hydrogen Production Cluster Project.' In the second phase, by 2025, SK aims to produce an additional 250,000 tons of carbon-free clean hydrogen near the Boryeong LNG Terminal, achieving the goal of becoming the world's leading eco-friendly hydrogen company.
The 30,000 tons of liquefied hydrogen produced in the first phase is enough for 75,000 hydrogen fuel cell vehicles, such as the Nexo, to simultaneously travel around the Earth once (approximately 46,520 km). This amount corresponds to the carbon reduction effect of planting 12 million trees, significantly contributing to environmental aspects such as improving air quality in the metropolitan area.
With the additional 250,000 tons produced in the second phase, SK will produce and supply a total of 280,000 tons of eco-friendly hydrogen annually in Korea and plans to actively promote hydrogen business in Asia, including China and Vietnam, leveraging its business experience and capabilities.
In the process of building the domestic hydrogen ecosystem, SK expects to create jobs not only in construction, shipbuilding, and automobile manufacturing sectors but also in fuel cells and hydrogen production fields, generating an employment inducement effect of 209,000 people including the Incheon region and socio-economic benefits worth 34.1 trillion KRW.
◆ Total investment of 18.5 trillion KRW to build the value chain including hydrogen production, distribution, and sales = SK E&S, SK Group's hydrogen business promotion company, will invest about 500 billion KRW to build a liquefied hydrogen production base to achieve the first phase goal of producing 30,000 tons of liquefied hydrogen. SK E&S plans to purchase approximately 13,000 pyeong (about 42,900 square meters) of land within the SK Incheon Petrochem complex in Wonchang-dong, Seo-gu, Incheon, and complete a hydrogen liquefaction plant with an annual capacity of 30,000 tons by 2023.
Once this facility is completed, SK E&S will purify by-product hydrogen supplied from SK Incheon Petrochem to high purity, process it into liquid form, and supply it to the metropolitan area.
The first phase project is significant as a key part of Incheon City's hydrogen cluster construction project. It is expected to greatly contribute to the local economy of Incheon through new hydrogen-related business discovery, high value-added creation, new employment inducement, and population inflow effects. It is also expected to be an important foundation for expanding hydrogen infrastructure at Incheon International Airport, Incheon Port, and industrial complexes.
Additionally, SK E&S plans to invest about 5.3 trillion KRW by 2025 to complete the world's largest clean hydrogen production base producing eco-friendly hydrogen from natural gas (LNG) and supply 250,000 tons of carbon dioxide-removed clean hydrogen annually. The plan to produce 250,000 tons of clean hydrogen annually at a single production base using carbon capture and storage technology is currently the only one of its kind pursued by SK E&S.
◆ Large-scale investments including hydrogen charging stations and fuel cell power plants = SK will actively invest in establishing a distribution system for eco-friendly hydrogen alongside liquefied hydrogen supply.
By 2025, SK plans to operate 100 hydrogen charging stations nationwide, supplying 80,000 tons of liquefied hydrogen annually, and build fuel cell power plants with a capacity of about 400 megawatts (MW), supplying 200,000 tons of hydrogen annually through dedicated pipelines.
As part of this, SK is also discussing various cooperation measures with Seoul City to revitalize the hydrogen economy, including building liquefied hydrogen charging stations, expanding hydrogen vehicle adoption, and establishing hydrogen experience centers.
At the Hydrogen Economy Committee meeting, Chairman Chey Tae-won said, "Hydrogen is an eco-friendly energy suitable for the domestic environment because it is not affected by climate and requires a small land area for production," adding, "SK will take the lead in establishing Korea's hydrogen ecosystem and fulfill corporate responsibility for achieving carbon neutrality by 2050."
Meanwhile, as SK and Hyundai Motor Group recently strengthened their cooperation in the electric vehicle battery business, the meeting of key executives from both groups in one place has raised expectations for their hydrogen business partnership, which both groups are accelerating as a future growth engine.
Before the Hydrogen Economy Committee meeting, executives from both groups held a roundtable to discuss specific cooperation plans such as collaborating on hydrogen charging infrastructure construction and establishing the 'K-Hydrogen Council,' a CEO consultative body for hydrogen business cooperation among domestic companies, to be launched in the first half of the year. After the roundtable, both parties signed a memorandum of understanding with Incheon Metropolitan City and Seo-gu District Office to build a hydrogen business foundation in Incheon. The signatories, including SK, will actively cooperate to discover and support various hydrogen-related business models in the Incheon region and expand the hydrogen economy.
Meanwhile, SK plans to actively utilize Plug Power's technology and business experience in establishing the domestic hydrogen economy ecosystem, including the Incheon liquefied hydrogen business, through a joint venture with Plug Power, a leading U.S. hydrogen market company in which SK recently secured a majority stake. SK will also concretize cooperation for joint entry into the Asian hydrogen market. At the end of January, SK exercised an additional stock purchase option, investing a total of 1.85 trillion KRW (1.6 billion USD) to acquire about a 10% stake.
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